The Variance of the Error Variable $\sigma _ { \varepsilon } ^ { 2 }$

question 208

True/False

The variance of the error variable, $\sigma _ { \varepsilon } ^ { 2 }$ , is required to be constant. When this requirement is violated, the condition is called heteroscedasticity.

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Definitions:

Normal Random Variable

A variable that follows a normal distribution, characterized by its mean and standard deviation, representing outcomes with a probabilistic nature.

Standard Deviation

An assessment of the extent to which values in a set are dispersed or varied from the mean, highlighting the differences from the average.

Z-score

A statistical measure that describes the position of a data point in terms of standard deviations from the mean.

Standard Normal Curve

A bell-shaped curve that represents the distribution of data in which the mean is 0 and the standard deviation is 1, used in statistics to represent theoretical distributions.